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CFPB Funding Case Endangers Consumer Financial Protection, Other Agencies

WASHINGTON, D.C. – The U.S. Supreme Court today heard arguments in Consumer Financial Protection Bureau v. Consumer Financial Services Association, a case brought by payday lenders that challenges Congress’s decision about how to fund the agency.

The case came to the Court after the Fifth Circuit Court of Appeals’ unprecedented ruling that funding for the Consumer Financial Protection Bureau (CFPB) violates the U.S. Constitution’s Appropriations Clause, which states that the federal government may spend money to fund an activity only when Congress has passed a law “appropriating” funds for that activity.

As Public Citizen explained in an amicus brief supporting the Bureau, the CFPB’s funding statute satisfies the requirements of the Appropriations Clause: It specifies the source from which the CFPB may draw funds, the amount it may draw, and the purposes for which the funds may be spent. That the funds come from a source other than general federal revenues poses no constitutional concern. Congress has long appropriated to agencies funds derived from fees, assessments, and other revenues attributable to agency activities.

“Since its creation in 2010, the CFPB has played a crucial role in consumer financial protection,” said Lisa Gilbert, executive vice president of Public Citizen. “The outcome of this case will have a significant effect on consumer protections in areas concerning credit cards, payday lending, home buying, and debt collection. At stake in this case is the very existence of the Bureau – the sole financial services agency focused on protecting consumers.”

“The theory that the funding is unconstitutional, if accepted by the Court, would also put at risk the Federal Reserve, the U.S. Postal Service, the Federal Deposit Insurance Corporation, U.S. Citizenship and Immigration Services, the Farm Credit Administration, the U.S. Bureau of Engraving and Printing, the Public Company Accounting Oversight Board, and the Tennessee Valley Authority, among others,” added Allison Zieve, director of Public Citizen Litigation Group.